These American investors find Chinese cities to be attractive revitalization opportunities

On December 25, 2018, the New York City-based private equity firm Warburg Pincus announced that it had purchased a stake in CREATER, a Chinese urban redevelopment firm.

Ellen Ng, Managing Director of Warburg Pincus, explained, “With dwindling new land supply in first-tier cities in China, the revitalization of existing land parcels and buildings within city centers has become an important investment focus of ours.”

On the back of CREATER’s rich experience in product design, conversion and operations, we see a big opportunity to significantly unlock the value of well-located but underutilized buildings through thoughtful repositioning. We look forward to working closely with the company to further grow and consolidate its leading position,” she added.

CREATER, which was founded in 2006, is among the early urban renewal companies in Shanghai. They primarily convert old and underutilized buildings into modern office, retail and exhibition centres. To date, the company manages and operates 26 projects, with a total area of 330,000 square meters, in the core areas of Shanghai.

The deal established a new acquisition joint venture with CREATER for a total equity commitment of up to $300 million. Established over 50 years ago, Warburg Pincus has invested over $70 billion in more than 835 companies spanning some 40 countries.

The joint venture with CREATER will focus on urban renewal asset acquisitions in first-tier cities in China. The joint venture targets to reach US$2 billion of assets under management in the next three years,” said Warburg Pincus in a statement.

This is the second major announcement that Warburg has made in China this month. Earlier, it had joined Hande Group, a Beijing-based investment firm, to jointly acquire and manage properties in China’s megacities, and also take on the debt associated with those real estate assets.

Both companies said they will jointly invest a total of $1 billion in this new joint venture to pursue special situations investments in real estate projects in China. This also comes at a time when Warburg Pincus is looking to raise its second China-focused private equity fund of up to $4 billion.

CREATER also provides its members with various value-add services, including office support services, and investment and financing services, the statement added.

As Fang Wen, President of CREATER, concluded, “Our urban renewal approach is not only to convert and improve the physical attributes of buildings, but also to redefine and uplift the service components in the process. We embrace the cultural history of each building and seek to balance the old and new elements in our urban renewal work. We are confident that our strategic partnership with Warburg Pincus will greatly enhance CREATER’s financing and operating capabilities and further expand our scale.”

Featured photo of Shanghai via Adobe Stock. All other photos courtesy of CREATER.

See CREATER website.

See Warburg Pincus website.

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